Best How To Make More Money In Forex Market With 'breakout Strategy' Tips You Will Read This Year

                                                                             

                                                               

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This article is aimed at discussing some simple Forex trading strategy, called 'Breakout Strategy'. The beginners, who are searching for some easy forex trading strategy, this article will greatly benefit them :-

This is called 'Breakout Strategy'.

No doubt, forex market is a well organized and highly liquid market with potential of making a lot of money but at the same time unexpectedly volatile, and can cause you loss your entire deposit. Forex market has the highest number of traders than any other market in the world. 


Over the time, numerous strategies have been invented and put into practice by countless number of experienced traders. This article will help you improve your knowledge and skills out of so many complicated and confusing strategies which are not only difficult to understand but more difficult to put into effect.

Whatever strategy you follow, you must keep one thing in mind that you have entered into forex market to make some money and not to lose money. A lot of traders come to this market as a part timer and they are quite unable to follow the latest developments in the market round the clock. So, the need for a simpler and easy-to-understand strategy arises.

To understand this strategy, one must understand the meaning of trend.

A trend may be described as the tendency for a market to continue moving towards a specific and overall direction. A trend-following system attempts to indicate buy and sell signals that emerge with the formation of new trends. 

There are many simple forex trading strategies designed to identify when a trend starts and ends. These days, a lot of traders make money simply by following trends. This has been a proven and well established method of making money in forex market as well as in stock market.

As all strategies have their drawbacks so does have this strategy i.e., making money by following trends. Three important points for this strategy to work perfectly :-

• It requires a clear knowledge to identify when a trend starts and ends

• Finding a reliable and strong trend requires a lot of knowledge and patience

• Strong trends are not available on a daily basis but the trader has to wait and watch

Breakout Strategy

A market always tends to move within it 'Support & Resistance' band prevailing at a specific period of time. This is called consolidation.

When the market moves beyond the boundaries of its consolidation creating 'New Highs' or 'New Lows' it's called a 'Breakout'.

A trend follows a 'Breakout'. It means if a new trend has to begin, then a 'Breakout' must occur first. A 'Breakout' is a clear signal that a new trend has begun.

So, whenever there is a breakout it may be assumed that a new trend is about to begin. 

When a new 'High' is created it indicates the possibility of an upward trend is beginning or vice versa.

So, how to guess the period we are entering into? 

Watch for the length of the period of a new trend. The 'Highest High' or the 'Lowest Low' is the factor. A breakout beyond the 'highest high' or 'lowest low' for a longer period suggests a 'longer trend'. On the contrary, a breakout for a short period suggests a 'short term trend'. One can refine a 'breakout strategy' depending on the duration of the trend.

The usual for identifying a 'long term trend' is -- Buy when the price breaks out above the '20 Day High' and sell when the price breaks out below the '20 Day Low'. 

This is a very simple strategy followed by a lot of traders daily in the market. Still there is a inherent drawback to this strategy. New Highs do not always indicate beginning of a new long term uptrend. 

Similarly, 'New Lows' cannot always guarantee a long term 'down trend'. But as all know no formula cannot guarantee 100 percent profit uniformly. 

RISK is one of the features of 'forex market' and 'stock market' as well.

The most simple way to overcome this 'risk' is always using a 'well calculated' 'stop loss'.

'Stop Loss' is the best way to save this kind of situation. Another well planned 'long term' strategy is to enter a 'positive trade' and hold it for three months at least. The benefit of this strategy is that it will make your anxiety free, when this 'short term' 'ups & downs' in the market. This is a proven strategy and followed in the stock market also.

Never follow a strategy blindly. It's always wise to put your planned strategy to test first. The best way to do this is to open a 'Demo Trading Account' with an authorized broker or firm and examine your strategy yourself.